Graduating college is a rite of passage for many, a stepping-stone for some, but for most it means no longer living in a tiny, box-like dorm room. Now, some developers are looking to challenge that concept.
They hope to attract recent graduates who are looking to branch out after spending four years sharing space with a roommate. Over the past 40 years, the number of households made up of one person has increased by almost 60 percent, according to the census. Single-person households now top out at 27 percent of all households nationwide.
The problem that many young college graduates are facing is that apartment rents in major cities have increased to the point where young adults cannot reach the income threshold for a downtown, studio apartment.
Rather than trying to find a cheaper apartment in the suburbs (with hidden expenses, such as commuting costs) or doubling or tripling up with roommates, developers are testing to see if cash-strapped adults would consider a new option: the micro unit, a tiny studio not much bigger than a college dorm room.
Several projects containing micro units have already been proposed in the region. The development group behind the Wharf on D.C.’s Southwest Waterfront has included a micro unit component with space that will measure between 330 and 380 square feet, significantly smaller than the average studio apartment, which ranges from 550 to 575 square feet. In addition, a new project planned for the 1400 block of Church Street NW features 29 micro units, along with several traditional one-bedroom apartments.
This phenomenon is not exclusive to Washington. Cities such as Chicago, Los Angeles, San Francisco, Boston and New York have all started to test the micro unit concept, to varying degrees of success. Mayor Michael Bloomberg started a competition to design the first micro-units for New York, while Boston developers have already begun working on five downtown projects.
In these other five cities, only about one half of households under 35 can afford downtown studios (assuming an annual income threshold of $75,000 for Chicago and L.A., and $100,000 for Boston, New York and San Francisco). When you put micro units in the equation however, the renter pool expands. New York could see an additional 160,000 renters qualify with these more affordable micro options, while Washington could add almost 100,000.
Furnished micro units could expand the market even further, as regular travelers to a city may opt for these more cost-effective units instead of a hotel, especially if a housekeeping option is available.
As a nascent market, micro units still have a ways to go. It will be interesting to see if renters embrace these new units. Innovative ideas are a gamble, but the demand should be there.
Walter Page is director of U.S. office research, Francesca Cooke and Connor Bevans are real estate economists for CoStar Group.